Global Healthcare Company To Enter DPA, Pay $345 Million To DOJ And SEC, To Resolve FCPA Claims
On June 25, 2020, Novartis AG, a global healthcare company headquartered in Switzerland, and two of its subsidiaries (one current and one former) agreed to pay a total of $345 million in disgorgement and fines to the U.S. Department of Justice and Securities and Exchange Commission to settle claims that they had violated the Foreign Corrupt Practices Act (FCPA). 15 U.S.C. §§ 78dd-1. Specifically, the DOJ entered into deferred prosecution agreements with a current Novartis subsidiary operating in Greece and a former Novartis subsidiary based in Singapore and overseeing operations in Vietnam, which agreed to collectively pay more than $233 million in criminal fines. And the parent company agreed to pay the SEC $112 million in disgorgement and pre-judgment interest.
SEC Reaches $8.8 Million Settlement With Pharmaceutical Company To Resolve Allegations Of FCPA Violations
On February 28, 2020, the U.S. Securities and Exchange Commission (“SEC”) announced a settled administrative proceeding with an Ohio-based pharmaceutical company, Cardinal Health, Inc. (“Cardinal”) over alleged violations of the Foreign Corrupt Practices Act (the “FCPA”). The settlement relates to alleged improper payments made by employees at its former Chinese subsidiary (“Cardinal China”) to government-employed healthcare professionals and employees at state-owned entities.
Judge Grants Post-Trial Acquittal On FCPA Counts
On February 26, 2020, a federal judge in Connecticut granted, in part, defendant Lawrence Hoskins’s post-trial motion for acquittal on seven counts relating to violations of the Foreign Corrupt Practices Act. United States v. Hoskins, No. 3:12cr238(JBA) (D. Conn.). The acquittal is the latest development in the seven-year case of Mr. Hoskins, a closely watched FCPA prosecution that raises significant questions regarding the extraterritorial reach of FCPA enforcement. Hoskins, a former vice president of French conglomerate Alstom SA, was convicted in November 2019 on charges that he helped to organize a scheme to bribe Indonesian officials in connection with a contract to build a power plant in Indonesia (the “Tarahan Project”). Based on the evidence adduced at trial, District Court Judge Janet Bond Arterton found that a reasonable jury could not conclude beyond a reasonable doubt that Hoskins was an “agent” of Alstom’s Connecticut subsidiary, Alstom Power Inc. (“API”). Accordingly, he could not be convicted of FCPA violations.
Korean Engineering Company Fined $75 Million Over Alleged Foreign Bribery Scheme In Brazil
On November 22, 2019, the U.S. Department of Justice (“DOJ”) announced that it had entered into a three-year deferred prosecution agreement (“DPA”) with a Korean engineering company (“SHI”) to settle allegations of Foreign Corrupt Practices Act (“FCPA”) violations in Brazil. Brazilian prosecutors entered a simultaneous resolution with the company, thus providing another example of U.S. and foreign prosecutors working together and coordinating on these types of cross-border prosecutions.
Reargument Sought On Whether Shareholders Can Be Victims Of FCPA Violation For Purposes Of Criminal Restitution
On August 28, 2019, Judge Garaufis of the United States District Court for the Eastern District of New York held that investors in a mining company, Africo Resources Ltd. (“Africo”), could seek restitution from a defendant under the Mandatory Victims Restitution Act (“MVRA”) for harm caused by the corporation’s bribery scheme.The defendant is a subsidiary operating in Africa (“African Subsidiary”) of an asset manager.The African Subsidiary recently moved for reargument of the Order.
Second Circuit Limits The Application Of McDonnell v. United States And Declines To Extend The Potential Scope Of Liability In FCPA Cases
08/13/2019On August 9, 2019, the United States Court of Appeals for the Second Circuit denied the appeal by a Chinese real estate developer of his 2017 conviction arising from the alleged bribery of United Nations (“UN”) officials. U.S. v. Ng Lap Seng, No. 18-1725 (2d Cir. 2019). In affirming the conviction, the Second Circuit ruled that the holding in McDonnell v. United States—in which the Supreme Court held that prosecutors must prove that a bribe is paid in exchange for an “official act” in cases involving the federal anti-bribery statute (18 U.S.C. § 201)—does not apply to prosecutions under the Foreign Corrupt Practices Act (“FCPA”). The Second Circuit clarified in its ruling that the FCPA and the anti-corruption law aimed at protecting federal funding, known as Section 666, are written differently and target a broader set of bribery goals than the federal anti-bribery statute that was at issue in McDonnell.
Technology Company Resolves DOJ And SEC FCPA Allegations, With Hungary Subsidiary Entering Three-Year, Monitor-Free NPA
On July 22, 2019, the United States Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) announced that they had resolved allegations of Foreign Corrupt Practice Act (“FCPA”) violations against Microsoft Corporation and one of its wholly owned subsidiaries, Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft. (“MS Hungary” and, together with Microsoft Corporation, “Microsoft”). As part of the settlement, Microsoft agreed to pay a total of approximately $25 million to the DOJ and the United States Securities and Exchange Commission (“SEC”), and MS Hungary entered into a three-year non-prosecution agreement (“NPA”). See Non-Prosecution Agreement, Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft. (July 22, 2019); DOJ Press Release, Hungary Subsidiary of Microsoft Corporation Agrees to Pay $8.7 Million in Criminal Penalties to Resolve Foreign Bribery Case (July 22, 2019); In the Matter of Microsoft Corporation, Exchange Act Release No. 86421 (July 22, 2019).
French Oil And Gas Company And U.S. Subsidiary Fined $296 Million Over Alleged Foreign Bribery Schemes Involving Brazil And Iraq
On June 25, 2019, the Department of Justice (“DOJ”) announced that it had entered into a three-year deferred prosecution agreement (“DPA”) with TechnipFMC PLC to settle allegations of Foreign Corrupt Practices Act (“FCPA”) violations in Brazil and Iraq, while requiring TechnipFMC’s U.S. subsidiary, Technip USA, to enter a guilty plea. United States v. TechnipFMC plc, 19 Cr. 278 (E.D.N.Y. June 25, 2019); United States v. Technip USA, Inc., 19 Cr. 279 (E.D.N.Y. June 25, 2019). The resolution is yet another example of U.S. prosecutors cooperating with foreign prosecutors, as Brazilian prosecutors entered into a simultaneous resolution with the company.